Facebook Rises on Report of Mobile-Advertising Gains

Facebook Inc., owner of a social network used by more than 1 billion people, rose more than 5 percent after a research report said the company is doing a better job making money from mobile advertising than many analysts surmise. Photographer: Chris Ratcliffe/Bloomberg

Oct. 17 (Bloomberg) -- Facebook Inc., owner of a social
network used by more than 1 billion people, rose more than 2
percent after a research report said the company is showing
signs of success in a push to make money from mobile users.

The company is “further along in monetizing mobile
advertising” than is generally believed, according to Martin
Pyykkonen, an analyst at Wedge Partners Corp. The stock advanced
to $19.88 at the close in New York. Facebook has fallen 48
percent since its May 17 initial public offering.

“We know mobile advertising is still early, but we also
think mobile advertising is near a positive inflection,”
Pyykkonen wrote. “Advertisers have to find effective ways to
advertise on mobile platforms because of the mass audience shift
to mobile that is under way.”

Facebook has come under pressure from investors to
demonstrate that it can wring sales from advertisers seeking to
reach people who socialize on mobile devices. Ads on smartphones
and other handheld electronics tend to be less lucrative than
those delivered to a desktop audience.

The company said earlier this year that ad growth wasn’t
keeping pace with user expansion. Third-quarter sales probably
rose 29 percent to $1.23 billion, according to the average of
analyst estimates compiled by Bloomberg. That’s less than the 32
percent increase in the second period, a slowdown from earlier
quarters.

Facebook is scheduled to announce third-quarter results on
Oct. 23.

Ad Tools

As part of its drive to boost mobile-ad sales, Facebook
said today that it’s expanding a tool that helps developers
advertise their wares. The ads, designed to drive downloads of
software applications on mobile devices, were first rolled out
to a limited number of partners in August. They’re now available
to all developers, the company said on a blog today.

Facebook’s first mobile ad services weren’t introduced
until March. The company has since unveiled other ad tools for
handheld devices.

While showing more optimism for Facebook’s ad efforts,
Pyykkonen said the company could face more competition from
Twitter Inc., the microblogging service that has focused
increasingly on mobile advertising.

“Twitter will present increasing large-scale competition
to Facebook for advertising spending,” he said.

Questions about mobile have been a drag on the stock, which
has closed above its initial public offering price only once
since it began trading in May.